Investor Presentation November 2015 Forward looking statements - - PowerPoint PPT Presentation

Investor Presentation

November 2015

1

Forward looking statements

Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results

• f the Company’s vessels, capital expenditures, expansion and growth opportunities, bank borrowings,

financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their obligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any forward- looking statement contained in this presentation, whether as a result of new information, future events or

• therwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward

looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.

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Euronav – Largest quoted tanker company in world

2 FSO Stripped water capacity 380k barrels 2.8 Million barrels Average age 12 years 1 V-PLUS Over 441,000 DWT Only 4 in world fleet 3 Million barrels Average age 12 years 23 SUEZMAX 125,000 – 180,000 DWT 1 Million barrels Average age 10 years 28 VLCC + 3 (TBD) Up to 320,000 DWT 2 Million barrels Average age 6 years

• New trading lanes established past 2 yrs
• USA shale reducing need for imports

pushing Atlantic to be “long” oil

• China and India diversifying suppliers
• China continues to fill SPR
• OPEC strategy for market share seeing

increasing output

• Potential for Iran to return to production

at pre-sanction levels = 1m bpd

• USA shale output largely intact since oil

price fall

• Russia, Kuwait, North Sea, West Africa
• all at record output
• Additional increase to order book over

summer driven by Tier III legislation

• Order book moderate at 17% VLCC &

18% Suezmax fleet

• natural

fleet rejuvenation = 15% order book or 3 years

• Financing of new builds much reduced

since 2009 – no private equity for 15 months

• Agencies consensus forecast 1.5m bpd

growth 2015 & 1.3m bpd 2016; base case of 1m bpd 2017-2020

• Lower oil price has stimulated demand
• Demand non-OECD > OECD
• Base demand 1m bpd = 30-40 VLCCs

Demand for Oil Vessel Supply Ton miles Supply

• f Oil

Current Fleet – Total 54 Vessels

Financing

• f ships

3

Demand for Oil has ALWAYS been robust

Oil @ $60

Refinery expansion in Asia & Middle East key driver

2017 +

Demand – robust outlook from refinery expansion & low oil price

Demand consistently upgraded during 2015 Refinery Throughputs and Tanker Earnings

Source: Citi

 Only 2 negative growth years since 1990

Source: EIA

4

Demand – 1m bpd = demand for 30-40 VLCCs pa

1m bpd of additional exports x 365 days = 365m barrels 365m barrels / 2m barrel capacity per VLCC = 180 cargoes 180 cargoes / 4.5 average no of journeys pa for VLCC (Atlantic – Far East) = 40 VLCCs

Source: Morgan Stanley

648 VLCCs Global Fleet 30 = 4.6% 40 = 6.2%

5

Supply – VLCC Order book – growing but moderate

Source: Clarksons

6

Supply – Suezmax Order book – more of a 2017 story

Source: Clarksons

7

Vessel Supply – manageable: financing now a barrier to entry

IMPORTANT - New era of financing is restrictive

Order book as % of fleet – manageable

Source: Clarksons Hamburg Marine Money *up to Nov 2014

Order book is back end loaded

Age profile of VLCC fleet – scrapping rates to rise 2018+

4 9 9 8 19 12 4 4 20 1 1 4 10 15 16 10 4 10 5 10 15 20 25 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 VLCC Suezmax 84% 62% 50 55 60 65 70 75 80 85 90 2008 2014 Bank Debt as % of Total Shipping Finance

Source: Clarksons Source: Clarksons

26% down

Source: Clarksons

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3 - Supply of Oil = more cargoes = more demand for shipping

Oil supply growth HUGE +6.6m bpd past two years Supply outlook – Robust: hard to see output cuts

Output m bpd 2013 2014 2015 2016 Comment North America 17.2 18.9 19.7 19.5 Shale growth likely negative but small % FSU 13.8 13.9 13.9 13.7 Rouble weakness & demand for $ driving output; Q3 15 record Saudi Arabia 9.6 9.7 10.2 10.4 continues to ramp up production China 4.2 4.2 4.3 4.2 static output Iraq 3.1 3.3 3.8 4 record production in Q3 2015 Iran 2.7 2.8 2.8 2.9 was producing 4m bpd pre sanctions Venezuela 2.5 2.5 2.4 2.5 output constant despite economic problems Nigeria 2 1.9 1.8 1.8 static output Libya 0.9 0.5 0.4 0.5 potential return to 1m bpd?

Source: ABG Sundal Collier

• Increase of global crude output not just a phenomenon of USA shale expansion
• Russia, Iraq, Kuwait, and Saudi Arabia all hit record production at some point in 2015
• OPEC importance is arguably diluted given diversity of oil supply and difficult to see

where cuts of sufficient magnitude will come from….and Iran to re-enter the market in 2016

Source: Energy Intelligence

9 Russia, 14% Saudi Arabia, 14% Oman , 11% Angola, 10% Iraq, 9% Iran, 6% Venezuela, 6% Kuwait, 4% Brazil, 3% Kazakhstan, 1% Libya, 1% Others, 20%

Source: China General Administration

China – solid demand: structural support from SPR & reforms

Two drivers underpin growth – SPR & “teapot” reform* China Oil demand – always been steady not spectacular

China imports diversification continues

China 2004 2005 2006 2007 2008 2009 Oil Demand (mbpd) 6.5 6.7 7.2 7.6 7.8 7.9 YoY growth (mbpd) 0.9 0.2 0.5 0.4 0.2 0.2 YoY growth % 16.1% 3.1% 7.5% 5.6% 2.3% 1.9% GDP growth % 8.8% 12.4% 12.5% 13.9% 7.1% 11.7% China 2010 2011 2012 2013 2014 2015e Oil Demand (mbpd) 9.0 9.4 9.8 10.1 10.6 10.9 YoY growth (mbpd) 1.1 0.4 0.4 0.3 0.4 0.3 YoY growth % 13.6% 4.2% 4.3% 3.5% 4.3% 3.0% GDP growth % 10.0% 8.7% 8.0% 7.6% 7.2% 6.8%

*Teapot refinery licences = 984k bpd (source: Arctic 28.10.15)

Source: China Customs –ratio is 4m tons = 1m bpd Source: Bloomberg

Base effect: China imports 7m bpd

Source: Energy Intelligence

7m bpd = 30.1 metric ton

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What does it all mean? Freight rates will remain volatile as they are set on a daily basis via an auction

Source: Clarksons

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What does it all mean? Rates are seasonal as well

12 $264 $339 $493 $650 $1,092 +$5,000 per day +$15,000 per day +$25,000 per day +$55,000 per day

Potential for Powerful Cash Generation

Euronav is well positioned for strong cash flow generation Pro forma fleet earnings capability (EBITDA, $M) 1

1 Based on full year contribution of 57 ships on proportionate basis

VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,000 Suezmax TCE rates $20,000 $25,000 $35,000 $45,000 $75,000

■ Breakeven (including debt service): ~$27,000 for VLCC

• opex $8,000

~$22,000 for Suezmax

• opex $7,400

■ FSOs generate a consistent, high quality income stream – $52mm of EBITDA ■ Dividend policy – to distribute at least 80% of net income (P&L definition)

Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $72mm

Next 12 months spot days exposure = 14,341 days

Company overview

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Fixed / Spot Exposure (Jan 2015) Fixed / Spot Exposure (Year end 2008)

18% 82%

• Chartering strategy seeks to maximize returns through optimal mix of spot and fixed charters
• Deliberately positioned itself toward more spot exposure at this stage of the cycle
• Look to maximize earnings through combining high-quality assets and directly employed

crews in storage opportunities for both short term and long-term (FSO) contracts

Chartering strategy – opportunistic rather than strategic

Chartering strategy allows Euronav to capitalize on increasing rate environment

17% 83%

Fixed Spot

Fixed / Spot Exposure (Year end 2004)

57% 43% 20% 80%

Fixed / Spot Exposure (September 2015)

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Maximizing value through size – Tankers International Pool

• Tankers International = Only owner-led VLCC pool; a cost

center

• No value leakage; no commissions
• Leading spot market oriented VLCC pool in which ship owners

with vessels of similar sizes and quality participate

• Innovation platform (VL Database, TI Pool App)

OTHER VLCC TANKER POOLS (ships on the water)

Overview of the Tankers International Pool Fragmented Global VLCC Fleet

VLCC Chartering undertaking leadership role

56 16 40

Source: Clarkson’s - Total 648 VLCC ships @ October 21 2015 Red indicates Captive or Sovereign fleet Blue indicates fleet in stock listed companies

1 ship owner, 37 vessels 2 ship owner, 52 3 ship owner, 24 4-10 ship owner, 154 10-15 ship owner, 103 COSCO Group, 17 SK Holdings, 18 NYK; 21 Fredriksen Group; 25 Euronav NV; 28 Angelicoussis Group, 29 Bahri, 31 MOL; 32 China Merchants Grp, 32 NIOC, 37

Top 10 Owners control 42% of global VLCC fleet

• Heidmar – VLCC Seawolf

7

• Navig8 – VL8 25
• China – Chinese VLCC

32

Source: Company reports

16

Euronav – substantial increase in TOTAL liquidity – shares fully fungible

* Does not include day 1 trading on NYSE 23 January 2015 = $104m value traded

10 20 30 40 50 60 70

$Million value traded per day

Total value traded in Dollars in Euronav shares since January 2014*

EURN US EURN BB

Average $21.4m

Source: Bloomberg based on Exchange volumes

17

Potential disruptive factors

China - slowdown

• Slowdown is relative – base effect on absolute numbers is key
• Strategic crude stockpile to grow 2015/2016
• Refinery plans in China well advanced & teapot reforms started

Yard Capacity Oil price increase

• Limited amount of yards building VLCC (11) /Suezmax (15-20)
• Financing landscape has changed post financial crisis
• Visibility until early 2018 only
• OPEC production cut could drive oil price higher
• Shale production stable above $40 per barrel
• Instability in specific oil producing states cuts output

Other

• Worldwide shale development – unlikely outside of USA
• OPEC output cut / Middle East reduce exports
• USA Export ban repeal – likelihood raised = positive for

tankers

Storage/Stockpiling

• Storage increasing across due to oversupply or strategic

reasons

• Function of oil oversupply and oil prices
• Ultimately stored crude needs to be shipped to final

destination

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Summary – Euronav – the largest crude tanker equity platform

Financing

• f ships

VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,000 Suezmax TCE rates $20,000 $25,000 $35,000 $45,000 $75,000

Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $72mm

$264 $339 $493 $650 $1,092 +$5,000 per day +$15,000 per day +$25,000 per day +$55,000 per day

• New trading lanes established past 2 yrs
• USA shale reducing need for imports

pushing Atlantic to be “long” oil

• China and India diversifying suppliers
• China continues to fill SPR
• OPEC strategy for market share seeing

increasing output

• Potential for Iran to return to production

at pre-sanction levels = 1m bpd

• USA shale output largely intact since oil

price fall

• Russia, Kuwait, North Sea, West Africa
• all at record output
• Additional increase to order book over

summer driven by Tier III legislation

• Order book moderate at 17% VLCC &

18% Suezmax fleet

• natural

fleet rejuvenation = 15% order book or 3 years

• Financing of new builds much reduced

since 2009 – no private equity for 15 months

• Agencies consensus forecast 1.5m bpd

growth 2015 & 1.3m bpd 2016; base case of 1m bpd 2017-2020

• Lower oil price has stimulated demand
• Demand non-OECD > OECD
• Base demand 1m bpd = 30-40 VLCCs

Demand for Oil Vessel Supply Ton miles Supply

• f Oil

Financing

• f ships